BY PAUL FEINBERG
UCLA Today
While the sluggish economy continues to limp
along nationally and in California, UCLA Anderson Forecast economists
see a glimmer of light ahead for Los Angeles County and Southern
California.
The economic outlook for the region, state
and nation were issued in reports that were released June 5
at a joint conference sponsored by the UCLA Anderson Forecast
and the Richard S. Ziman Center for Real Estate.
The good news is that payroll employment in
Los Angeles County will reach 4.1 million by the end of 2004,
according to senior economist Chris Thornberg, with unemployment
falling to 6.3%. Serious growth is being forecast for the different
trade sectors, both retail and wholesale, business services,
professional services and health care. And the motion picture
sector is poised to add back some recently lost jobs.
“Los Angeles and its neighbors continue
to be the primary source of growth in California,” Thornberg
said. “The primary problem in the region remains weak
external demand, but despite the current slowdown in the [national]
economy, the overall forecast for Los Angeles remains positive.”
Also, the residential real estate boom isn’t
expected to cool off soon in the Southland, a forecast supported
by the most recently released data that show home prices are
still rising as new and existing homeowners take advantage of
unusually low interest rates. On the non-residential side in
Southern California, new construction has slowed somewhat, but
not nearly as much as commercial real estate in the northern
cities.
But the news for California overall re-mains
grim, with the state economy still in a recession. The state’s
unemployment rate, currently at 6.7%, will remain higher than
the national rate. The state rate will average 6.6% in 2004.
But the state downturn will end in the third quarter of this
year, predicted senior economist Tom Lieser. Realistically,
the national economy should show enough strength by the end
of this year to pull California along with it, he said.
With several state budget options on the table
as of the report’s release, Lieser declined to make definitive
predictions for the public sector. However, his mid-range estimate
for 2003-04 is the loss of 50,000 new and existing state and
local government jobs.
As for the national picture, where the manufacturing
sector has lost 2.5 million jobs already, with no relief in
sight, recent tax cuts offer little hope of pulling the economy
out of its slump, said Forecast Director Edward Leamer, who
refers to the cuts as “No. 1 on the Top 10 list of things
that will not stimulate the economy.” Without a corresponding
spending cut, the tax cut is actually a “tax postponement,”
explained Leamer, with this year’s government bills being
paid for with borrowed money.
For several quarters now, Leamer has said that
the current stagnation is due to a lack of stimuli on the business
side of the economy. In recessions past, consumers have spent
the nation into recovery. But this time, with low interest rates
already driving consumers to purchase next year’s houses
and cars this year, there isn’t much more consumers can
do. Until business investment picks up across the board, the
national economy will continue to lurch along, Leamer said.
To learn more, visit http://uclaforecast.com.
